WMG / How the Grinch Stole Christmas!

The Grinch from the cartoon/book is an AU Kris Kringle/Claus.
Let's say that the animals couldn't get to Claus in time to protect him from the Winter Warlock. The Warlock discovers him, and as evil as he is, he cannot bring himself to kill a child. He raises him as his own - instilling him with a hatred of all things good and fun. Somewhere in the Grinch's young adult years, he comes across a lost dog from Sombertown and takes him in, thus explaining how he got Max. Eventually, the Warlock passes on as a mean and despicable creature due to Claus never showing up to help him, and leaves the mountain to "Grinch", as he has come to be called. Perhaps due to a split in time, somebody else has taken on the role of Santa Claus and has gone along a similar path that The Grinch would have (i.e. becoming a world-renowned giftgiver). Sombertown, once the Burgermeister falls out of power, becomes a happier place and is renamed Whoville to reflect this.

The film (and the original book and special, for that matter) and Horton Hears a Who! are in the same universe.
The film is set on a snowflake, but as noted in the main page, it could be the speck of dust on the snowflake.note  Once the snowflake melts, the speck attached itself to a flower in the Jungle of Nool and stayed there. As for the Who's, let me explain my hypothesis:

The Grinch is actually the same species as the Who's. He is a different subspecies though, explaining his greenness. The 'Grinch' kind of Who are actually quite numerous, but live quite a distance away from Whoville. Sometime after the events of his story, the 'Grinch' kind of Who's, for some reason or another, relocate to Whoville. The Who's seen in Horton Hears A Who are the result of generations of interbreeding between the two kind of Who's, which also explains the remarkably different Whoville in Horton's story and (in the film version) all the weird technology.
  • And also The Cat in the Hat. In the movie, the crate is a portal to that speck, which he called "his world".
  • Related to this, "Here" and "There" is the same world as the speck. It's not just a tiny planet, it's a microverse.

The Whos were cat people.
It wasn't exaggeration when they said "Packages, boxes and bags". It was literal. They love to curl up in them, because they're cat people. That's also why David Bowie looks kinda like a cat.

Dr. Seuss originally intended the Grinch to be just another Who
In the original illustrations, the Grinch's eyes are the only aspect that makes him look different from the Whos. When Chuck Jones painted him green, people assumed he was some kind of cave monster, leading to his "mutant" backstory in the live-action version. Dr. Seuss envisioned him as a hermit who lived in a cave and "Grinch" as a nickname instead of a species name.
  • You're quite right, but, well, since the Whos are very colorful people in the special and given that the Grinch is, aside from his green coloration, quite like the other Whos, I always saw him as indeed a who hermit. Also, the color of his eyes (red when he's nasty, but turning blue upon his redemption) demonstrate that in the Seussiverse, the color of a character can be altered by his behavior. Perhaps he's a Who whose nastiness gradually made him turn green, and not the contrary as the live-action movie strangely believe.

The Whos are humanoid insects.
Cindy Lou Who (who is no more than 2) is clearly a larva. She has no visible legs, and she, and all the other younger Whos, have visible antennae that the adult Whos don't have. At some point in her development, she will enter a pupal stage, and emerge with legs and less obvious antennae.
  • I think that you're not entirely in the wrong, but you're going too far. Indeed the Whos have antennae that can lead people to think that they are insects, which make sense for tiny creatures living on a speck of dust. However, Cindly Lou Who is obviously wearing a NIGHTDRESS, that's why you don't see her legs. But she has some.

Dr Seuss knew French

Could be a Headscratcher as well, actually. If it wasn't unknown whether Seuss actually knew French or not, but it strikes me that Grinch is the first syllable of French word "Grincheux", which means Grumpy.

The Grinch isn't redeemed in the ending - he got possessed.
As said above, the Grinch's eyes change color from red to blue right before the heart-growing scene. The Whos' arrangement when they're singing also looks a whole lot like a Summoning Ritual - and that's not even counting the brilliant spark that appears in the middle of their circle!

Obviously, the Whos, in order to get revenge and to save their presents, caused the Grinch to get possessed by the Christmas Spirit.